v3.25.4
Income Taxes
 12 Months Ended
Dec. 31, 2025
Income Tax Disclosure [Abstract]  
Income Taxes INCOME TAXES
Current and Deferred Income Tax Expense
Domestic and foreign pre-tax loss from continuing operations is as follows:
 Year Ended December 31,
 20252024
Domestic$(8,128)$(13,772)
Foreign(305)1,162 
Domestic and foreign pre-tax loss$(8,433)$(12,610)


Income Tax Provision
As of December 31, 2025, the operations of PWSH and subsidiaries in Japan, Hong Kong, and Canada were classified as held-for-sale and the results were reported within discontinued operations.
Income tax expense (benefit) attributable to continuing operations is comprised of the following: 
 Year Ended December 31,
 20252024
Current:
State$3 $5 
Foreign(187)24 
Total current(184)29 
Deferred:
Foreign— 15 
Total deferred— 15 
Provision for income taxes, net:
State3 5 
Foreign(187)39 
Provision for income taxes, net:$(184)$44 

Income tax expense allocated to discontinued operations was $427 and $434 for the periods ended December 31, 2025 and December 31, 2024, respectively.
The reconciliation from the U.S. federal statutory income tax rate to our effective income tax rate, applying ASU 2023-09 prospectively, is as follows: 
 Year Ended December 31, 2025
AmountRate
U.S. statutory federal tax rate$(1,771)21.0 %
State taxes and credits, net of federal benefit3 0.0 
Foreign tax effects127 (1.5)
Tax credits
Research tax credits(71)0.8 
Changes in valuation allowance1,305 (15.5)
Nontaxable or nondeductible items
Equity compensation435 (5.2)
Other2 0.0 
Changes in unrecognized tax benefits(221)2.7 
Other adjustments7 (0.1)
Total$(184)2.2 %


The reconciliation from the U.S. federal statutory income tax rate to our effective income tax rate, applying ASC 740, prior to the adoption of ASU 2023-09, is as follows: 
 Year Ended December 31, 2024
AmountRate
Federal statutory rate$(2,648)21.0 %
Impact of foreign earnings(20)0.2 
Change in valuation allowance330 (2.6)
Expiration of tax attributes1,962 (15.6)
Research and development credits and deductions(178)1.4 
Stock-based compensation276 (2.2)
Other322 (2.6)
Effective income tax rate$44 (0.4)%
The effective tax rate for continuing operations for the year ended December 31, 2025 was 2.2%. The effective tax rate differs from the statutory rate of 21% primarily due to the valuation allowance against the Company's U.S. federal and state deferred tax assets. State income tax expense is made up of state minimum taxes, the majority of which relates to the state of California. The tax effects of discontinued operations are excluded from the rate reconciliations above and are presented separately within discontinued operations.
Income Tax Paid
Cash paid for income taxes (net of refunds) consisted of the following:
 Year Ended December 31, 2025
State
California$6 
Other1 
Foreign
China5 
Taiwan28 
Total income taxes paid$40 
Deferred Tax Assets, Liabilities and Valuation Allowance
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amounts for income tax purposes. Significant components of our deferred tax assets and liabilities are as follows: 
 December 31,
 20252024
Deferred tax assets:
Research and experimentation credit and deduction carryforwards$9,376 $10,532 
Net operating loss carryforwards34,206 33,648 
Depreciation and amortization199 494 
Reserves and accrued expenses243 67 
Deferred stock-based compensation318 631 
Foreign tax credit carryforwards53 82 
Other187 256 
Total gross deferred tax assets44,582 45,710 
Deferred tax liabilities:
Other(231)(303)
Total gross deferred tax liabilities(231)(303)
Less valuation allowance(44,382)(45,434)
Net deferred tax liabilities$(31)$(27)

As a result of meeting the discontinued operations criteria for PWSH, net deferred tax assets of $46 associated with PWSH were classified as a part of assets held-for-sale as of December 31, 2025.
We continue to record a full valuation allowance against our U.S. federal and state net deferred tax assets as of December 31, 2025 and 2024, as it is not more likely than not that we will realize a benefit from these assets in a future period. We have not provided a valuation allowance against our other net deferred tax assets as we have concluded it is more likely than not that we will realize a benefit from these assets in a future period because our subsidiaries in these jurisdictions are cost-plus taxpayers. The net valuation allowance decreased $(1,052) for the year ended December 31, 2025 and decreased $(585) for the year ended December 31, 2024.
As of December 31, 2025, we had federal and state net operating loss carryforwards of $157,902 and $18,298 respectively, which will begin to expire in 2026 with $44,637 of our federal net operating loss carryforward lasting indefinitely. As of December 31, 2025, we had available federal and state research and experimentation tax credit carryforwards of $3,478 and $5,392, respectively. The federal tax credits will begin expiring in 2026 while the state credits have an indefinite life.
Our ability to utilize our federal net operating losses may be limited by Section 382 of the Internal Revenue Code of 1986, as amended, which imposes an annual limit on the ability of a corporation that undergoes an "ownership change" to use its net operating loss carryforwards to reduce its tax liability. An ownership change is generally defined as a greater than 50% increase in equity ownership by 5% shareholders in any three-year period.
We are not indefinitely reinvested in the earnings of our subsidiaries in China and Taiwan and have accrued tax on the future repatriation of cash for jurisdictions where withholding taxes would apply.
Uncertain Tax Positions
We have recorded tax liabilities to address potential exposures involving positions that could be challenged by taxing authorities. As of December 31, 2025, the amount of our uncertain tax positions was a liability of $106 and a reduction to deferred tax assets of $1,320. As of December 31, 2024, the amount of our uncertain tax positions was a liability of $361 and a reduction to deferred tax assets of $1,280.
The following is a summary of the change in our liability for uncertain tax positions and interest and penalties: 
20252024
Uncertain tax positions:
Balance at beginning of year$1,536 $1,601 
Reversal of accrual for positions taken in a prior year44 14 
Reversals due to lapse of statute of limitations(163)(79)
Balance at end of year$1,417 $1,536 
Interest and penalties:
Balance at beginning of year$105 $97 
Accrual for positions taken in prior year1 10 
Reversals due to lapse of statute of limitations(97)(2)
Balance at end of year$9 $105 
During the years ended December 31, 2025 and 2024, we recognized $1 and $10, respectively of interest and penalties in income tax expense in our consolidated statements of operations.
We file income tax returns in the U.S. and various foreign jurisdictions. A number of years may elapse before an uncertain tax position is resolved by settlement or statutes of limitations. Settlement of any particular position could require the use of cash. If the uncertain tax positions we have accrued for are sustained by the taxing authorities in our favor, the reduction of the liability will reduce our effective tax rate.
We are no longer subject to U.S. federal, state, and foreign examinations for years before 2022, 2021 and 2018, respectively. Our net operating loss and tax credit carryforwards from all years may be subject to adjustment for three years following the year in which utilized. We do not anticipate that any potential tax adjustments will have a significant impact on our financial position or results of operations.
Our 2022 U.S. income tax return was selected for audit by the Internal Revenue Service and the audit was closed without adjustment. We were not subject to, nor have we received any notice of, income tax examinations in any other jurisdiction as of December 31, 2025.
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the 2021 Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. Key provisions include modifications to depreciation allowances and the treatment of research and development expenditures. The legislation has multiple effective dates, with certain provisions effective for the 2025 tax year and others being implemented through 2027.